Nominee vs. Legal Heir: Have you nominated someone for a bank account, insurance, or property, and are thinking that they will become the owner of the entire property after you? If so, wait a minute! According to Indian law, the roles of a nominee and a legal heir are different. Many people, due to not understanding this difference, end up entangled in family disputes and legal complications. Let's understand, in simple terms, the real difference between a nominee and a legal heir.

Who is a nominee?

A nominee is someone you name on your bank account, insurance policy, shares, or property with the trust that they will temporarily manage the money or property after your death. That is, they are the caretaker, not the actual owner.

For example, if a man has nominated his wife for his bank account and then dies, the bank will transfer the money to the wife's name, but the money will not belong to the wife alone. According to the law, children and parents will also have a right to that amount. This means that the nominee only has the right to manage the property, not ownership.

Who is an heir?
A legal heir is a person who legally receives a share in the property. This right is determined by the Hindu Succession Act, 1956, or the inheritance laws of the respective religion.

In Hindu families, generally, the husband, wife, parents, and children are considered legal heirs. The heir has full ownership rights over the property, meaning they can sell, divide, or transfer it.

Why is a nominee not the owner?
Many people register the name of a nominee on their flat or land, but keep in mind that this does not make the nominee the owner of the property. The Supreme Court has repeatedly stated that, “The nominee is not the owner of the property, but merely a trustee for legal heirs.” This means that the nominee is merely a caretaker, while the actual owner is the one listed in the will or inheritance law.

What is the role of a nominee in a bank account or insurance policy?

After a person's death, the bank or insurance company gives the money to the nominee to meet the immediate needs of the family. However, if legal heirs claim it later, the money will be distributed among the legal heirs.

For example, if a father has nominated his son in an insurance policy, and the son receives the money after his death, the amount will not be considered entirely his. The mother and other children will also have equal shares.

A Will Provides Real Security?
Many people appoint a nominee but do not make a Will, and this is where disputes arise. If you want clarity for your family regarding your property, it is essential to have a Registered Will. A Will can determine who will receive which property and in what proportion. This will prevent any disputes between the nominee and the heir after your death.

Why is it important to seek legal advice?
Every asset has a different nature and rules. Whether it's a bank account, insurance, shares, or a flat, the interpretation of the law varies slightly. Therefore, it's best to consult an experienced lawyer or chartered accountant to make the right decision. This can help protect your family from future problems like disputes, court cases, or property claims.

Disclaimer: This content has been sourced and edited from News 18 hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.